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Revised regulations may refocus the scrap metal business.

Dan Sandoval February 26, 2013

As recyclers throughout Europe seek to grow their business, they have to contend with a litany of laws, policies and regulations that could alter how they conduct business.

For European recyclers, any signs of an improved market for recyclables are being challenged by a host of EU policies and regulations throughout the continent that often make it more difficult for them to grow their businesses.

While contending with an extended slump in the economies through most of Europe, there have been a number of legislative and regulatory initiatives that could reshape the metals recycling industry in particular.

One issue that has recently gained in importance for many scrap metal recyclers throughout Europe is the European Union’s goal to develop an end-of-waste criterion for scrap copper.

In early 2013, the European Parliament has submitted a proposal to determine when copper scrap ceases to be waste under the Directive of the European Parliament and of the European Council.

According to the Parliament, the chief concern raised by some member states has been that the quality criterion of less than 2% of the total amount of foreign materials in copper scrap resulting from the recovery operation was too stringent.

The European Commission (EC) took note of this. However, the EC also maintains and refers the same legal proposal to the Council on the basis of the Joint Research Centre’s (JRC) technical report, which, in consultation with stakeholders, concluded that 2% represents a safe environmental limit on foreign materials for copper scrap to cease to be waste.

The European Metal Trade & Recycling Federation (EUROMETREC), a European association representing metals recyclers in Europe, has called for the Council of the European Union to not let the disagreement over contamination levels delay the adoption of end-of-waste criteria for copper scrap.

In a statement, EUROMETREC notes that it “fully supports that the Council of the European Union come to an agreement on the proposed Council Regulation establishing criteria determining when copper scrap ceases to be waste.”

The association continued, saying, “We thank those member states’ experts that also raised the threshold to 5% from the 2% threshold.

“Crucially, EUROMETREC would not want to see the regulation fail to get support at the Council on account of the threshold, after all one of the regulation’s recitals allows for review of the criteria.”

To address the differences of opinion between the regulatory body and recyclers, The European Commission, through its Council of the European Union, is expected to have an agreement reached on the policy and resubmit it to the European Commission for further discussion.

In a follow-up statement, Ross Bartley, EUROMETREC’s environmental and technical director, notes that the issue is quite significant for metals recyclers. “As it is unlikely that any individual member states have yet designated any copper scrap to be a product or to have set rules for industrial scrap arisings, it follows that in the EU all copper scrap is waste and waste laws and restrictions apply. The question then arises as to what point in the recycling value chain copper scrap can cease to be a waste and be a product. The proposed Council Regulation can clarify that question.

“The proposed ‘Council Regulation establishing criteria determining when copper scrap ceases to be waste’ is currently going through the legislative process at the Council of the European Union,” Bartley continues.

Going further, he adds that even if the Council comes to an agreement in the near future, there will still be a number of steps that the policy will need to go through. “It will be a while before it can be applied by either scrap collecting, or sorting or processing companies. Those companies may then decide whether the scrap they supply to their customer either already meets, or can be further sorted or processed to meet, the set environmental, health and safety and quality criteria.”

In further lobbying to have a clearer understanding of the importance of reclassifying copper scrap, EUROMETREC notes that defining end-of-waste for scrap as early as possible in the recycling value chain based on high quality, human health and environmental conditions and criteria will remove the administration burden of the waste legislation.

Ultimately, by developing clearer standards of the differences, the recycling market should be improved by reducing both the costs and restrictions, he adds.

“The producers of the scrap metal may decide which scrap they want to cease to be waste. The decision by scrap processors to decide to deliver scrap as a product will mainly be based on the trade-off between the costs of meeting the high quality, human health and environmental requirements set by the regulation in return for the savings through regulatory relief from waste laws which would then no longer be needed,” Bartley says. “A quality management system will be needed to demonstrate the conditions and criteria are met; thereafter the product will have to comply with product legislation in order to benefit from unrestricted market access.”


Confidentiality Concerns

A policy that has created a significant amount of angst among scrap processors surrounds an EU environmental law that conflicts with what many recyclers say is business confidentiality policies.

According to EU law, shippers of recyclables are required to list the generator of the material they are shipping. Interseroh Scrap and Metal Trading GmbH, based in Cologne, Germany, argued the case that providing the information is an action that can jeopardize business.

The issue ultimately ended up in the Court of Justice of the European Union in the case of Interseroh Scrap and Metal Trading vs. Sonderabfall-Management-Gesellschaft Rheinland-Pfalz mbH (SAM), which was responsible for supervising the waste streams.

In its claim, Interseroh said that as the intermediary dealer between the generator of the recyclables and the consumer, it did not have to present information on the original generator.

While it was determined the material Interseroh was shipping would fall under the ‘green’ list of wastes established by the EU, the company was required, as part of the regulation, to ensure that the material was accompanied by the documentation showing the original source of the supply to its customers. However, in its defense, Interseroh claimed that by providing the information, its customers would have the opportunity to directly contact the generator, ultimately exempting Interseroh from further business.

Interseroh further stated that the obligation to reveal its sources of supply to its customers infringes on its right to protection of its business secrets and represented a serious impediment to its economic activity as an intermediary dealer. That obligation also causes it financial damage since the information concerning its sources of supply constitutes a substantial share of the undertaking’s business know-how and goodwill. Lastly, Interseroh added that it had already lost numerous customers as a result of the obligation to reveal its sources of supply.

However, in its ruling the court ruled that the regulation, as amended by Regulation No. 308/2009, must be interpreted as requiring an intermediary dealer, in the context of a shipment of waste covered by that provision, to complete the document listing the generator and transmit it to the consignee, “without any possibility of the scope of that requirement being restricted by a right to protection of business secrets.” In its final ruling the Court ruled that Interseroh was required to provide the information on the generator of the material they were shipping.

According to Bartley, this decision jeopardizes the business of all scrap traders in the EU as the enforcement screw tightens and they are forced to reveal to their customers who they bought the scrap from in the first place.

In a statement, he points out the ruling “is connected to the years the European Trade Federations have promoted “End-of-Waste” legislation in order to protect the scrap businesses’ access to scrap, and access to their customers that are properly licensed, permitted or otherwise authorized to handle scrap (EU Waste Shipment Regulation Annex VII Confidentiality issues).

Bartley notes that the Annex VII form specified for complying with the EU Waste Shipment Regulation and the strict description of how the form should be completed and circulated causes traders to disclose to buyers where the waste originated from, thereby enabling buyers to directly contact the waste generator and reduce or eliminate the trader’s business.

To assuage the problems, EUROMETREC, along with the European Ferrous Recovery & Recycling Federation (EFR) and the BIR, has proposed an electronic alternative to the Annex VII form, which the groups say will vastly improve its applicability to identifying illegal shipments yet provide business confidentiality.


Steel Remedies
For the steel industry in Western Europe, problems have become quite acute. Slack demand for the finished product, increased competition from producers outside the region and regulatory policies have all worked to create significant economic pressures on steel producers. For processors of scrap metal, softer end markets also are creating a sluggish outlook.

To combat the difficulties, a roundtable, recently convened by the European Commission, brought together representatives from 13 steel-producing EU countries. The goal of the roundtable was to create a dialog between the steel industry, unions and the European Commission on ways the steel industry and its suppliers could remain competitive on the world market.

The group held its first meeting in September of 2012 and another meeting later in the year. Among a host of concerns expressed by participants was the shortage of ferrous scrap.

In a follow up meeting held in February 2013, the roundtable laid out concrete steps it recommends to strengthen the European steel industry. In addressing concerns over the scrap metal supply, participants noted that the obstacles to the access to scrap includes the inefficiency of recycling markets, what it calls a growing problem of illegal exports of scrap from the EU and constraints on scrap exports imposed by countries outside the EU.

To combat the problems, roundtable participants came up with a list of recommendations, including a raw materials initiative to address export restrictions on material through negotiations and, where appropriate, enforcement activities.

Other recommended steps include calling on the European Commission to implement a scheme for monitoring the development of internal market conditions for iron and steel scrap, studying the illegal export of end-of-life vehicles and other scrap-related products; and calling for European regulatory agencies to provide for increased transparency in raw material derivative markets.

 

The author is senior editor of Recycling Today Global Edition and can be contacted at dsandoval@gie.net.

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